8 July 2008
IAG poised to announce "Big Bang" restructure
New CEO to initialize shake up with analysts predicting job cuts.
Insurance Australia Group's (IAG) new CEO, Mike Wilkins (pictured), is reportedly wasting no time in his first weeks in the job.
He's set to announce 500 redundancies as the insurer struggles to regain investor confidence.
Analysts apparently believe the cuts will be officially announced at an investor briefing on Wednesday July 9 in Sydney as part of a "big bang" restructuring announcement, which could also include a AU$200 million writedown of a UK investment.
He's set to announce 500 redundancies as the insurer struggles to regain investor confidence.
Nail-biting wait
While the official announcement is due on Wednesday, predictions of the cuts arose almost a week ago, meaning a tense time for employees as they wait for the axe to fall.
Mike Wilkins, employed by former CEO Michael Hawker late in 2007, is battling to revive IAG's fortunes after a takeover bid by rival QBE was rejected in May. IAG's shares have tumbled since then, a situation amplified by overall stock market performance.
Update: Added 07/09/08
At today's briefing, Insurance Australia Group CEO Mike Wilkins confirmed earlier reports of redundancies, stating the firm will cut 600 jobs in Australia as part of a restructure.
Around AU$130 million per year will be saved by the so-called "efficiency program". "The majority of that $130 million will come from internal cost saves and unfortunately most of those saves will be from around head count reductions,'' Wilkins told journalists.
"We currently expect that that will be in the order of about 600 people to leave our operations in Australia."
The cuts represent around 5% of IAG's Australian workforce.
Have your say
Is media speculation damaging your employee morale? How do you prepare for unexpected leaks to the media? What communication methods have you found work best when announcing major layoffs.
Discuss these issues in the comments section below and find out more about communicating with employees during economic downturn during Melcrum's forthcoming webinar dedicated to the topic.
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